“LAW FIRMS OFFER BILLING ALTERNATIVES TO CATER TO CLIENTS’ FINANCIAL NEEDS”
In order to better serve their business clients, some law firms in northeast Ohio and around the country have begun to offer alternatives to the traditional practice of billing by the hour. At Cleveland’s Walter & Haverfield LLP, for instance, clients who choose to use the firm’s General Counsel Services Group pay a flat monthly retainer fee for most legal work. Leonard D. Young, who heads this new practice area, realizes that budgetary concerns are paramount to many potential clients. He notes that, “One thing that gets in the way of a small or midsize company using a lawyer is the fear of unexpected legal fees.” Consequently, these alternative billing arrangements can be ideal for companies which cannot afford the expense of in-house legal staffs or the cost of extensive, time-consuming legal matters.
One company which has signed on with Walter & Haverfield, under a retainer-based billing arrangement, is the Cleveland-based consulting firm of ZBK Partners LLC. Zachary Coleman, its managing director, is pleased with this arrangement because it allows him to consult an attorney whenever the need arises, without having to worry about the costs escalating once the firm becomes engaged in a particular matter. This method of billing is, in fact, reminiscent of the way that law firms practiced years ago, when most attorneys were familiar with numerous aspects of the law. It is less prevalent today, however, since most young lawyers are so specialized in their practices that they may not have the capacity to handle the variety of legal issues which a company may face on a day-to-day basis.
Another method gaining popularity is the practice of billing on a contingency basis, in which the law firm agrees to shoulder more of the risk when it commences legal work for a client. In this type of arrangement, the parties generally concur that the attorneys will receive a specific percentage of whatever judgment or settlement is ultimately realized by the client, provided that the firm is successful in its handling of the particular case.
Attorney Amy Leopard, who heads the “health care” side of Walter & Haverfield’s General Counsel Services Group, understands the clients’ concerns. A former hospital administrator herself, she is aware that they are constantly seeking to minimize both their costs and their risks where legal matters are concerned. This leads, then, to the adoption of more creative billing practices, such as these contingency and retainer-based arrangements, as law firms attempt to cater to their clients’ wishes. As Ms. Leopard notes, “Clients don’t mind spending the money-if they can see the value.”
As companies have looked for ways to trim expenditures, many have decided to disband their inhouse legal staffs. As a result, firms such as Walter & Haverfield have stepped in to fill this void. By offering their services through a retainer-fee arrangement, these firms can increase the clients’ comfort level by building solid relationships over a period of time and, in addition, can provide them with access to attorneys who are experienced in various facets of the law. This, in fact, is what prompted Dylon Industries, Inc., a Brooklyn-based company, to choose Walter & Haverfield to handle its legal affairs. As Don Sweeney, the company’s finance director notes, “When we have a question on HR, he brings in his HR guy. It’s nice to have a single point of contact. No one person could have all that knowledge.”
Companies like Dylon, whose legal needs are irregular in nature, have found that the monthly retainer-fee arrangement can also save them money. According to Leonard Young, clients have the option of renewing their contracts periodically, based upon the type of legal services which they require. The firm, too, has benefited from these arrangements and, if the nature of a specific matter becomes too time-consuming, it also retains the right to revisit the type of billing arrangement which is in place. In such matters, like those involving litigation, it may be necessary for the firm to revert to the traditional practice of billing by the hour. In this event, though, Mr. Young said that the firm would take care to sit down with the client and prepare a budget which is mutually agreeable.
(In order to read the entire article, please see the April 16-22, 2007 issue of Crain’s Cleveland Business, Vol. 28, No. 15, published by Crain Communications, Inc.)
